Japan, China forge gas exploration deal

The expected compromise over energy resources in the East China Sea ends a long-running dispute between the two nations.

Japan and China have agreed on a gas exploration deal in the East China Sea, striking a compromise over a long-running bilateral row, news reports said Monday.

Kyodo News, citing sources close to Japan-China negotiators, said late Sunday that the two nations are expected to announce the deal as early as this week. The Nihon Keizai daily, Japan's top business paper, also said Monday that the two governments were finalizing details on the gas deal.

Kyodo said China had agreed to let Japan invest in its gas exploration project in the East China Sea. The Nihon Keizai daily said China and Japan would share profits equally from the gas project.

While calling the deal a compromise over the long-running energy dispute, Kyodo said the agreement did not "appear to bring an end" to the row overall because the issue of demarcation remained.

The undersea gas fields are one of numerous territorial disputes between Japan and China in the East China Sea. The conflicts range from where to demarcate each country's exclusive economic zone to sovereignty over a small island chain.

China is tapping gas fields, but Japan says they should be jointly developed.

Both nations are eager to develop new sources of energy and have held talks since 2004 in a bid to settle the dispute.

Kyodo said the compromise deal underlined Beijing's priority on economic development, while the Nihon Keizai daily said Japan could obtain exploration rights under the deal. The paper did not give the amount of Tokyo's investment in the gas project.

Following May talks with Chinese President Hu Jintao in Tokyo, Japanese Prime Minster Yasuo Fukuda said the two countries were on the verge of resolving the dispute over the exploitation of natural gas field in the East China Sea.